SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 11-K
ANNUAL REPORT
Pursuant to Section 15(d)
of the Securities Exchange Act of 1934
For the Fiscal Year Ended December 31, 2001
FIRST MID-ILLINOIS BANCSHARES, INC.
401(k) PROFIT SHARING PLAN
Full Title of Plan
FIRST MID-ILLINOIS BANCSHARES, INC.
1515 Charleston Avenue
P.O. Box 499
Mattoon, Illinois 61938
Name of Issuer of the
Securities Held Pursuant to the Plan
and the Address of the Principal Executive Office
FIRST MID-ILLINOIS BANCSHARES, INC.
401(k) PROFIT SHARING PLAN
Financial Statements and Supplemental Schedule
December 31, 2001 and 2000
(With Independent Auditors' Report Thereon)
FIRST MID-ILLINOIS BANCSHARES, INC.
401(k) PROFIT SHARING PLAN
Table of Contents
Page
Independent Auditors' Report 1
Statements of Net Assets Available for Plan Benefits 2
Statement of Changes in Net Assets Available for Plan Benefits 3
Notes to Financial Statements 4
Schedule H, Line 4i - Schedule of Assets (Held at End of Year) 11
INDEPENDENT AUDITORS' REPORT
The Participants and Plan Trustee of the
First Mid-Illinois Bancshares, Inc.
401(k) Profit Sharing Plan:
We have audited the accompanying statements of net assets available
for plan benefits of the First Mid-Illinois Bancshares, Inc. 401(k)
Profit Sharing Plan as of December 31, 2001 and 2000, and the related
statement of changes in net assets available for plan benefits for the
year ended December 31, 2001. These financial statements are the
responsibility of the plan administrator. Our responsibility is to
express an opinion on these financial statements based on our audits.
We conducted our audits in accordance with auditing standards
generally accepted in the United States of America. Those standards
require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An
audit also includes assessing the accounting principles used and
significant estimates made by the plan administrator, as well as
evaluating the overall financial statement presentation. We believe
that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present
fairly, in all material respects, the net assets available for plan
benefits of the First Mid-Illinois Bancshares, Inc. 401(k) Profit
Sharing Plan as of December 31, 2001 and 2000, and the changes in net
assets available for plan benefits for the year ended December 31,
2001 in conformity with accounting principles generally accepted in
the United States of America.
Our audit was performed for the purpose of forming an opinion on the
basic financial statements taken as a whole. The supplemental schedule
of assets (held at end of year) is presented for the purpose of
additional analysis and is not a required part of the basic financial
statements but is supplementary information required by the Department
of Labor's Rules & Regulations for Reporting and Disclosure under the
Employee Retirement Income Security Act of 1974. This supplemental
schedule is the responsibility of the plan administrator. The
supplemental schedule has been subjected to the auditing procedures
applied in the audit of the basic financial statements and, in our
opinion, is fairly stated in all material respects in relation to the
basic financial statements taken as a whole.
KPMG LLP
Chicago, Illinois
June 24, 2002
FIRST MID-ILLINOIS BANCSHARES, INC.
401(k) PROFIT SHARING PLAN
Statements of Net Assets Available for Plan Benefits
December 31, 2001 and 2000
2001 2000
---- ----
Assets:
Investments, at fair value:
Mutual funds $ 7,177,175 8,268,829
Money market funds 221,488 310,511
Certificates of deposit 1,303,496 1,104,813
Employer common stock 3,247,187 2,368,547
Common stock 123,008 195,101
Participant loans 240,965 252,823
---------- ----------
12,313,319 12,500,624
Receivables:
Interest and dividends 33,777 30,148
---------- ----------
Total assets 12,347,096 12,530,772
Liabilities:
Cash overdraft 1,637 --
Refunds due to excess contributions 8,299 5,311
---------- ----------
Net assets available for plan benefits $12,337,160 12,525,461
=========== ==========
See accompanying notes to financial statements.
2
FIRST MID-ILLINOIS BANCSHARES, INC.
401(k) PROFIT SHARING PLAN
Statement of Changes in Net Assets Available for Plan Benefits
Year ended December 31, 2001
Changes in net assets attributed to:
Investment income (loss):
Interest and dividends $226,140
Net depreciation in fair value of investments (565,794)
--------
Total investment loss (339,654)
--------
Contributions:
Employer 474,999
Participants 506,540
Rollovers 501,824
--------
Total contributions 1,483,363
---------
1,143,709
Changes in net assets attributed to
benefit payments 1,332,010
---------
Net decrease in net assets
available for plan benefits (188,301)
Net assets available for plan benefits:
Beginning of year 12,525,461
----------
End of year $12,337,160
===========
See accompanying notes to financial statements.
3
FIRST MID-ILLINOIS BANCSHARES, INC.
401(K) PROFIT SHARING PLAN
Notes to Financial Statements
December 31, 2001 and 2000
(1) DESCRIPTION OF PLAN
The following description of the First Mid-Illinois Bancshares,
Inc. 401(k) Profit Sharing Plan (the Plan) provides only general
information. Participants should refer to the plan agreement for a
more complete description of the Plan's provisions.
General
-------
The Plan is a defined contribution plan established January 1,
1985, covering all eligible employees of First Mid-Illinois
Bancshares, Inc. (the Company) and any of its subsidiary
corporations. All full-time employees who have completed one-
half year of service are eligible to participate in the Plan.
Under the provisions of the Plan, each participant may direct
their contributions into any of ten investment options
available under the Plan. The Plan currently offers seven
mutual funds, a money market fund, certificates of deposit,
and the Company's common stock as investment options for
participants. Participants are also allowed to transfer all or
part of their actual balances between these funds. The Plan is
subject to the provisions of the Employee Retirement Income
Security Act of 1974 (ERISA).
Contributions
-------------
Under the provisions of the Plan, all employees who have
entered into a compensation reduction agreement with the
Company may elect to reduce their eligible compensation by up
to 15%, subject to the dollar limitations of section 402(g) of
the Internal Revenue Code (Code), $10,500 for the 2001 Plan
year, and to have the Company contribute this amount to the
Plan as a before-tax contribution of the participant. The
Company also makes a matching contribution calculated as a
percentage of the before-tax contribution made on behalf of
each contributing participant. The Company determines this
percentage each year. Matching contributions, however, will
not exceed 6% of the eligible compensation of each participant
in any year. For the year ended December 31, 2001, the
matching contribution percentage was 2%.
4
FIRST MID-ILLINOIS BANCSHARES, INC.
401(K) PROFIT SHARING PLAN
Notes to Financial Statements
December 31, 2001 and 2000
The Company may also, at its sole discretion, contribute to
the Plan an amount to be determined from year to year as a
profit sharing contribution. For the year ended December 31,
2001, the profit sharing contribution was 4% of eligible
compensation. Participants who work at least 1,000 hours of
service during the Plan year are entitled to this contribution
regardless of whether they elect to make a before-tax
contribution.
Participant Accounts
--------------------
Separate participant accounts are maintained for the purpose
of distributing the Plan's earnings or losses, forfeitures,
voluntary employee contributions, and employer contributions.
Allocations are based on participant earnings or account
balances, as defined in the Plan. Forfeited nonvested accounts
are allocated to participant accounts annually. The benefit to
which a participant is entitled is the benefit that can be
provided from the participant's account.
Participant Loans
-----------------
Participants may borrow from their fund accounts a minimum of
$1,000 up to a maximum equal to the lesser of $50,000 or 40%
of their account balance. Loan transactions are treated as a
transfer between the various investment funds and participant
loans. Maturity dates range from March 2003 through August
2013. The loans are secured by the balance in the participant's
account and bear interest at a rate commensurate with local
prevailing rates as determined by the plan administrator.
Interest rates on loans outstanding at December 31, 2001 ranged
from 4.75% to 9.50%. Principal and interest is paid ratably
through periodic payroll deductions.
Vesting
-------
Participants are immediately vested in their voluntary
contribution and the Company's matching contribution, and any
earnings thereon. The Company's 4% profit sharing
contribution, and any earnings thereon, vest according to the
following schedule:
5
FIRST MID-ILLINOIS BANCSHARES, INC.
401(K) PROFIT SHARING PLAN
Notes to Financial Statements
December 31, 2001 and 2000
Years of service Vested percentage
---------------- -----------------
1 0%
2 20
3 40
4 60
5 80
6 100
Payments of Benefits
--------------------
On termination of service, a married participant's vested
account balance will be paid in the form of a qualified joint
and survivor annuity and an unmarried participant's vested
account balance will be paid in the form of a life annuity.
Under the provisions of the Plan, a participant may waive the
right to receive the annuity form of payment and receive a
lump sum distribution instead.
Administrative Expenses
-----------------------
Administrative expenses of the Plan are paid by the Company.
Forfeited Accounts
------------------
Forfeitures of terminated nonvested account balances allocated
to remaining participants at December 31, 2001 and 2000
totaled $16,227 and $22,177, respectively. Forfeitures are
allocated to participant accounts as a prorata share based on
compensation.
Plan Termination
----------------
Although it has not expressed any intent to do so, the Company
has the right under the Plan to terminate the Plan subject to
the provisions of ERISA. In the event the Plan is terminated,
participants will become fully vested in their accounts.
6
FIRST MID-ILLINOIS BANCSHARES, INC.
401(K) PROFIT SHARING PLAN
Notes to Financial Statements
December 31, 2001 and 2000
(2) SUMMARY OF ACCOUNTING POLICIES
Basis of Accounting
-------------------
The financial statements of the Plan are prepared using the
accrual method of accounting in accordance with accounting
principles generally accepted in the United States of America.
Investment Valuation and Income Recognition
-------------------------------------------
Quoted market prices are used to value the mutual funds and
stock. Money market accounts and certificates of deposit are
valued at cost, which approximates fair value. Participant
loans are recorded at the unpaid principal balance of the
loans which approximates fair value. The Plan's investments
are held in a trust account (the Trust) administered by First
Mid-Illinois Bank & Trust (the Bank), a wholly owned
subsidiary of the Company.
Purchases and sales of securities are recorded on a trade-date
basis. Interest income is recorded on the accrual basis.
Dividends are recorded on the ex-dividend date.
Use of Estimates
----------------
The preparation of financial statements in accordance with
accounting principles generally accepted in the United States
of America requires the plan administrator to make estimates
and assumptions that affect certain reported amounts and
disclosures. Accordingly, actual results could differ from
those estimates.
Payment of Benefits
-------------------
Benefits are recorded when paid.
7
FIRST MID-ILLINOIS BANCSHARES, INC.
401(K) PROFIT SHARING PLAN
Notes to Financial Statements
December 31, 2001 and 2000
(3) INVESTMENTS
The following table presents the fair value of individual
investments which represent 5% or more of the Plan's net assets
available for plan benefits at December 31:
Investment Description 2001 2000
--------------------------------------------- ----------- ---- ----
First Mid-Illinois Bank & Trust, Certificate of
Certificate of Deposit deposit $ 960,206 801,930
Federated Max Capital Fund Mutual fund 1,981,559 2,256,078
Janus Adviser Balance Fund Mutual fund 1,041,766 1,022,612
Janus Adviser Worldwide Fund Mutual fund 1,252,844 1,596,079
Vanguard Growth Index Fund Mutual fund 1,735,326 2,046,020
First Mid-Illinois Bancshares, Inc. shares Common stock 3,247,187 2,368,547
During 2001, the Plan's investments (including gains and losses
on investments bought and sold, as well as held during the year)
appreciated (depreciated) in value as follows:
Mutual funds $(1,190,194)
Employer stock 621,987
Common stock 2,413
-----------
Net depreciation in fair value of
investments $ (565,794)
===========
(4) NONPARTICIPANT-DIRECTED INVESTMENTS
Information about the net assets relating to the
nonparticipant-directed investments as of December 31, 2001 and
2000, and the significant components of the changes for the year
ended December 31, 2001, is as follows:
8
FIRST MID-ILLINOIS BANCSHARES, INC.
401(K) PROFIT SHARING PLAN
Notes to Financial Statements
December 31, 2001 and 2000
2001 2000
---- ----
Net assets:
Certificate of deposit $343,290 302,883
======== =======
Changes in net assets:
Contributions $331,044 290,952
Interest income 12,246 11,931
Transfers to participant-directed
investments (302,883) (288,864)
-------- --------
$ 40,407 14,019
======== ========
(5) TAX STATUS OF THE PLAN
The Company adopted a Prototype Standardized Profit Sharing Plan
with a cash or deferral arrangement which received a favorable
opinion letter from the Internal Revenue Service on September 25,
1995 stating that the Plan and related Trust are designed in
accordance with applicable sections of the Internal Revenue Code,
and the Trust is, therefore, exempt from Federal income tax under
provisions of Section 501(a). The Plan has been amended since
receiving the opinion letter. However, the plan administrator and
the Plan's legal counsel believe that the Plan is designed and
currently being operated in compliance with the applicable
requirements of the Internal Revenue Code. Therefore, no provision
for income taxes has been included in the Plan's financial
statements.
(6) TRANSACTIONS WITH RELATED PARTIES
The Plan holds certificates of deposit with the Bank, a related
party. The certificates of deposit totaled $1,302,355 and
$1,104,813 at December 31, 2001 and 2000 and interest income of
$48,433 was recorded during 2001. The Plan also had an investment
in 136,436 and 125,763 shares of the Company's common stock at
December 31, 2001 and 2000, respectively. The common stock had a
cost and fair value of $2,498,471 and $3,247,187, respectively, at
December 31, 2001 and $2,256,094 and $2,368,547, respectively, at
December 31, 2000. Related dividends received on the Company's
stock for 2001 were $51,083.
9
FIRST MID-ILLINOIS BANCSHARES, INC.
401(K) PROFIT SHARING PLAN
Notes to Financial Statements
December 31, 2001 and 2000
(7) RECONCILIATION OF FINANCIAL STATEMENTS TO FORM 5500
The following is a reconciliation of net assets available for plan
benefits per the financial statements at December 31, 2001 to the
Form 5500:
Net assets available for plan benefits
per the financial statements $12,337,160
Benefit obligations currently payable (5,661)
-----------
Net assets available for plan benefits per
the Form 5500 $12,331,499
===========
The following is a reconciliation of benefit payments per the
financial statements for the year ended December 31, 2001, to the
Form 5500:
Benefit payments per the financial statements $ 1,332,010
Benefit obligations currently payable 5,661
----------
Benefit payments per the Form 5500 $ 1,337,671
===========
Benefit payments to participants are recorded on the Form 5500 for
benefit claims that have been processed and approved for payment
prior to December 31, 2001, but not yet paid as of that date.
10
SCHEDULE
FIRST MID-ILLINOIS BANCSHARES, INC.
401(k) PROFIT SHARING PLAN
Schedule H, Line 4i - Schedule of Assets (Held at End of Year)
December 31, 2001
Number
of shares Current
Identity of issuer and description of investment or units value
------------------------------------------------ ---------- -------
Money market accounts:
Goldman Sachs Financial Squares 13,652 $ 13,652
Federated US Treasury Cash Reserve 15,669 15,669
Federated Prime Obligation Fund 180,347 180,347
NTHN Institutional Funds Government Select 11,820 11,820
Certificates of deposit:
First Mid-Illinois Bank & Trust CD; 5.5%,
maturing December 31, 2001 (nonparticipant-
directed, cost of $342,149) * -- 343,290
First Mid-Illinois Bank & Trust CD; 5.5%,
maturing December 31, 2001 (participant-
directed) * -- 960,206
Mutual funds:
Federated Mid Capital Index Fund 21,544 364,523
Federated Max Capital Fund 85,302 1,981,559
Federated Total Return Bond Fund 32,694 343,284
Janus Adviser Balance Fund 45,494 1,041,766
Janus Adviser Worldwide Fund 42,731 1,252,844
PBHG Growth Fund 22,489 457,873
Vanguard Growth Index Fund 65,707 1,735,326
Common stock:
Bank One Corporation 3,150 123,008
First Mid-Illinois Bancshares, Inc.* 136,436 3,247,187
Participant loans (at interest rates ranging
from 4.75% to 9.50%, with maturity dates
ranging from March 2003 through August 2013)* 240,965
-----------
Total investments $12,313,319
===========
* Party-in-interest
See accompanying independent auditors' report.
11
SIGNATURES
THE PLAN. Pursuant to the requirements of the Securities Exchange
Act of 1934, the Plan Administrator has duly caused this annual report
to be signed on its behalf by the undersigned hereunto duly authorized.
FIRST MID-ILLINOIS BANCSHARES, INC.
Date: June 28, 2002 By: /s/ William S. Rowland
-------------------------------
William S. Rowland
Its: President and Chief Executive
Officer
12